1
Dec
House prices continue to rise, says Nationwide
UK house prices have risen for the seventh consecutive month,
helped by better-than-expected news from the job market, the
Nationwide has said.
The building society said that the average home increased in
value by 0.5% in November compared with October and now costs
£162,764.
The typical home was 2.7% more expensive than a year ago, at a
similar level to prices in early 2006.
Separate figures show that mortgage lenders' deposit demands are
easing.
Slowing rate
The Nationwide said that the three-month on three-month rate of
increase had slowed from 3.5% in October to 2.8% in November.
This measure is generally seen as a truer picture of the market
as it cuts out any short-term volatility.
"This suggests that house prices are now rising at a more
moderate pace than in the spring and summer months, when they
experienced a very strong bounce from the early 2009 lows," said
Nationwide chief economist Martin Gahbauer.
But overall there has been some surprise that prices have
continued to rise steadily in the recession, with Mr Gahbauer
pointing to unemployment figures as a key factor.
"The outlook for the housing market remains crucially dependent
on labour market conditions, and here recent developments have been
somewhat more encouraging than might have been expected," he
said.
"Part of the explanation for why unemployment has not risen to
the levels implied by the recession's depth is that in many cases
employers have opted to reduce working hours and pay rather than
make employees redundant.
"Even though workers who have been forced from full-time
employment into part-time work will have experienced a reduction in
income, the impact has been less severe than it would have been if
they had lost their jobs completely."
This, coupled with low mortgage rates, meant that fewer people
than expected were forced into selling their homes which in turn
kept house prices steady.
Lenders' trend
There has been a further easing of mortgage rationing in the
last month, according to the financial information service
Moneyfacts.
The number of mortgage deals on offer rose by 5% to 1,425 - the
largest number since December last year.
The proportion of those requiring a deposit of between 0% and
15% of a property's value rose from 25% of the total at the start
of November to 27% at the beginning of December.
And the proportion of deals needing a 20% downpayment rose from
9% to 11%.
But there was a fall in the proportion of mortgages needing a
down payment of 25% or more. They fell from 66% of the total to
62%.
"Lenders have adjusted to the post-banking crisis world and are
starting to relax their lending criteria," said Michelle Slade, of
Moneyfacts.
"In the last month, we have seen lenders increasing the LTVs
[loan-to-value] that their existing deals are available to or
launching new deals at higher LTVs.
"Significant increases are being seen in the number of deals
available for borrowers with a 10% or 15% deposit. Many house price
indices are now reporting a rise in house prices, meaning that the
risk of higher LTV loans has lessened."
source: www.bbc.co.uk/news Tuesday 1st
December 2009